Venture capital investment in minority business enterprise: an evaluation of MESBIC investment preferences

R B McNaughton, M B Green

Received 26 July 1987; in revised form 15 December 1987

Abstract. The encouragement of minority entrepreneurship is frequently advocated as a means of promoting social and economic development. The Minority Enterprise Small Business Investment Company (MESBIC) program pursues this goal by increasing the access of minority business enterprise (MBE) to both human and financial capital. This research provides an exploratory empirical description of the regional, industrial sector, and funding-stage preferences of MESBICs. It is concluded that these preferences are largely antithetical to the formation and expansion of MBEs in growth sectors that offer the market potential for entrepreneurial takeoff. The primary problem seems to be the small size of the majority of MESBICs. Policies governing licensing requirements and administration should therefore be reconsidered.

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